Axiom 2014 Annual Report - page 52

Notes to the Financial Statements
for the year ended 30 September 2014
Axiom Mining Limited
2. Significant accounting policies (continued)
For non-financial assets, the fair value measurement
also takes into account a market participant’s ability
to use the asset in its highest and best use or to sell it
to another market participant that would use the asset
in its highest and best use.
The fair value of liabilities and the entity’s own equity
instruments (excluding those related to share-based
payment arrangements) may be valued, where there is
no observable market price in relation to the transfer of
such financial instruments, by reference to observable
market information where such instruments are held
as assets. Where this information is not available, other
valuation techniques are adopted and, where significant,
are detailed in the respective note to the financial
f. Property, plant and equipment
Property, plant and equipment are stated in the
balance sheet at cost or revaluation less accumulated
depreciation and impairment losses. Leasehold land
is stated at its fair value, which has been determined
considering future lease payments, term of the lease
and implied interest.
Revaluations are performed with sufficient regularity to
ensure that the carrying amount of these assets does not
exceed their recoverable amount at balance sheet date.
Changes arising on the revaluation of property, plant
and equipment are generally dealt with in other
comprehensive income and are accumulated separately
in equity in the asset revaluation reserve. The only
exceptions are as follows:
when a deficit arises on revaluation, it will be
charged to profit or loss to the extent that it exceeds
the amount held in the reserve in respect of that
same asset immediately prior to the revaluation; and
when a surplus arises on revaluation, it will be
credited to profit or loss to the extent that a deficit
in respect of that same asset had previously been
charged to profit or loss.
Gains or losses arising from the retirement or disposal of
an item of property, plant and equipment are determined
as the difference between the net disposal proceeds
and the carrying amount of the item and are recognised
in profit or loss in the period in which they arise. Any
related revaluation surplus is transferred from the
revaluation reserve to accumulated losses.
Depreciation is calculated to write off the cost or
revaluation of items of property, plant and equipment,
less their estimated residual value, if any, using the
straight line method over their estimated useful lives.
The principal annual rates used for this purpose are
as follows:
Leasehold land
over the lease term
Leasehold improvements over the lease term
Plant and equipment
20% – 33%
Both the useful life of an asset and its residual value, if
any, are reviewed annually, and adjusted if appropriate,
at the end of each reporting period.
g. Mineral exploration expenditure
Mineral exploration, evaluation and development
expenditures incurred are capitalised in respect of
each identifiable area of interest. These costs are only
capitalised to the extent that they are expected to be
recovered through the successful development of the
area or where activities in the area have not yet reached
a stage that permits reasonable assessment of the
existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are
written-off in full against profit or loss in the year in
which the decision to abandon the area is made.
When production commences, the accumulated costs
for the relevant area of interest are amortised over the
life of the area according to the rate of depletion of the
economically recoverable reserves.
A regular review is undertaken of each area of interest
to determine the appropriateness of continuing to
capitalise costs in relation to that area.
Costs of site restoration are provided for over the life of
the project from when exploration commences and are
included in the costs of that stage. Site restoration costs
include the dismantling and removal of mining plant,
equipment and building structures, waste removal,
and rehabilitation of the site in accordance with local
laws and regulations and clauses of the permits. Such
costs have been determined using estimates of future
costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted
for on a prospective basis. In determining the costs
of site restoration, there is uncertainty regarding the
nature and extent of the restoration due to community
expectations and future legislation. Accordingly,
the costs have been determined on the basis that
the restoration will be completed within one year
of abandoning the site.
h. Leases
An arrangement, comprising a transaction or a series
of transactions, is or contains a lease if the Group
determines that the arrangement conveys a right to a
specific asset or assets for an agreed period of time in
return for a payment or a series of payments. Such a
determination is made based on an evaluation of the
substance of the arrangement regardless of whether
the arrangement takes the legal form of a lease.
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